NYC, LA and DC Are Tops for Flexible Office Sector, Study Shows
Los Angeles ranks second behind only Manhattan when it comes to the top U.S. markets for the flexible office sector, according to a new report from CBRE.
Manhattan was tops with more than 13 million square feet of flexible office as of 2018, a year-over-year increase of 30 percent. Los Angeles followed with 4.2 million square feet dedicated to the sector, a year-over-year increase of 15 percent. Washington, D.C., meanwhile took third with 3.2 million square feet of space taken by flexible office operators, a year-over-year increase of 16 percent.
The top 10 markets out of 30 markets studied by CBRE, account for more than 70 percent of the nation’s flexible-office inventory with Manhattan accounting for 25 percent alone.
“The mature markets of Manhattan and San Francisco are the two most concentrated flexible office space markets, yet only have less than 3.5 percent of office stock dedicated to this type of solution. Strong job growth, low vacancy and rents among the highest in the nation suggest that there is room to grow in these markets for much more flexible office space, especially in the form of enterprise solutions. Other global gateway markets such as Beijing and London have flexible office space in more than 5 percent of their market,” Julie Whelan, head of Occupier Research for CBRE Americas, told Commercial Observer.
Only 15 markets out of the 30 major markets CBRE studies in fact have more than 1 million square feet of flexible office inventory, according to the study. Given that, high office-using employment growth markets, like Nashville, Austin and Charlotte are poised for further growth as are other U.S. markets, which have not scratched the surface of this sector.
“Markets like Austin and Nashville are not even at a 2 percent concentration of flexible space in their markets. They are among the top markets in the nation for office-using job growth and are still very much in an expansionary phase that will likely result in much more growth in the flexible office space niche,” Whelan said.
In addition, 85 percent of real estate executives planning to implement flexible-office-solutions into their portfolio strategies, according to the 2018 Americas Occupier Survey.